The Association for the Protection of Consumers (ACP) insists that the next 48th National Assembly adopt a quality and working law regulating the activities of collection companies and those that distribute quick loans. The data of the BNB indicate that the trend of the growth of loans from banks and non-financial institutions, which began in 2020, continues, and in July 2022 they increased by 13% on an annual basis, according to Peyo Mayorski, chairman of the AZP.
The Consumer Protection Association has repeatedly warned about the risk of indebtedness to citizens. A major reason for this trend two years ago was the shutdown of the state due to the COVID-19 pandemic, as most economic activities were blocked. Many small and family businesses went bankrupt. An inflationary spiral and an energy crisis followed, the end of which is not yet in sight. Therefore, as we have repeatedly warned, the unfavorable trend of increasing non-performing loans will continue. In this direction, BNB data show that they grow on an annual basis by 14.3%, and on a quarterly basis – by 20.1%, the announcement adds.
Given the volatile political environment and the looming fragmented parliament, we appeal to political parties to act responsibly by passing the necessary laws to ease the pressure on households. Moreover, the problem of access to the Central Credit Register and the excessive rights given to non-financial institutions such as fast loan companies and collection companies remain unsolved. The same, despite final court decisions for lack of obligations, have the power to damage the credit files of citizens and mark them as debtors, according to the AZP.
Since the beginning of 2022, the market for quick loans has been in full bloom with an increase of nearly 23% on an annual basis, which, according to the calculations of the BNB, means that the amount of all claims on this type of loans sets a record by exceeding BGN 4 billion, and only for the first half of the current year. For comparison, a year ago the receivables were at the level of BGN 3.34 billion. AZP’s calculations show that in the second half of 2023, debt collection firms will again be on an upward trend in buying up bad debts, improving on the peaks reached in 2019-2020. They are also expected to increase their penalty rates, but unlike the banks, they refuse to publicly present the formulas with which they form the interest rates in question, AZP notes.
In the last Parliament, the then Deputy Prime Minister and Minister of the Economy, Kornelia Ninova, tried to push through a bill, which, however, mainly covered obligations to operators of utility services. He was locking up payday loan companies and banks. AZP reminds that there is a report of the National Tax Agency dedicated to the collection companies, which is indicative of the scale of this business. The document also examines the possible risks to national security, possibly given the fact that some of the companies in the sector are of unclear origin, as well as the indirect connection between quick loans and collection firms.
“We draw attention to the fact that the recent statements of the former chairman of the Commission for Consumer Protection and former deputy minister Dimitar Margaritov about the qualities of the bill in question are manipulative.
We remind you that Art. 2, para. 2 excludes all financial institutions appearing in the BNB register. The reference shows that there are both quick loan companies and collection companies, and some of the largest ones. Moreover, Art. 2, para. 2 also excludes the banks themselves from the scope of the bill. The texts of the law must be clear and not give rise to disputes and different interpretations”, added the Association.